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Expect Congress to Enact Chemical Security Rules

July 25, 2005 | Author: Steven J. Shimberg

Law Firm: DLA Piper US LLP - Washington Office

Few homeland security issues are receiving more attention in Congress than chemical facility security. With government reports identifying approximately 15,000 chemical facilities producing and stockpiling large inventories of dangerous chemicals, and the fear that many of these facilities are vulnerable to a terrorist attack, Congress is primed to take action. While the chemical industry has been proactive in undertaking voluntary security initiatives, the clear consensus on Capitol Hill and in the Administration is that more is necessary. It is highly likely that federal law will soon replace voluntary action to secure those facilities at greatest risk.

Chemical facilities are being portrayed as rich targets with multiple vulnerabilities. Government studies suggest that a well-coordinated attack has catastrophic potential: according to a 2003 Environmental Protection Agency (EPA) report, a terror attack at any one of 123 facilities throughout the United States could expose more than one million people to a toxic plume. How such an attack might unfold has also been suggested. In July 2004, the White House's Homeland Security Council outlined more than a dozen high-impact terror scenarios. In one scenario, terrorists detonate a chlorine tank. The report posits that the resulting chlorine cloud could extend as far as 25 miles, threatening hundreds of thousands of people downwind and killing as many as 17,500 persons. Furthermore, the chemical supply chain depends on and intersects with other critical infrastructure sectors, thereby increasing points of vulnerability.

Emerging Consensus that Congress Must Act

Although the chemical industry has taken laudable steps to increase security voluntarily, concern that terrorists will indeed turn a chemical facility into a weapon of mass destruction has prompted fresh calls for bipartisan legislative action. Led by Senators Susan Collins (R-ME), Jon Corzine (D-NJ), Joe Lieberman (D-CT), and others, a new consensus is emerging that federal security regulations are required.

Administration Now Supports Legislative Action

Most importantly, the Bush Administration, which earlier opted for a laissez faire approach to chemical security, has now determined that voluntary industry action must be buttressed by legislation. Congress is certainly ready to take the next step. Senator Collins -- chair of the Homeland Security and Government Affairs Committee -- hopes to introduce a bill later this summer that will create uniform, measurable, and enforceable security requirements.

Issues the Chemical Industry Should Expect

Forthcoming chemical security legislation will certainly contain language requiring a host of security improvements. However, chemical facility owners, operators, transporters, and service provides are well advised to monitor legislative activity for several key issues:

Federal Preemption: Congress will need to decide whether federal requirements will create a "security floor," allowing individual states to add more burdensome security requirements, or a "federal ceiling" that would preempt a patchwork of inconsistent state mandates. Businesses whose chemical production, storage, and transportation networks extend beyond a single state typically support federal preemption as a means to establish regulatory uniformity and avoid the cost and compliance burden of conflicting state laws.

Regulatory Enforcement: Legislation will empower the Department of Homeland Security (DHS) to promulgate implementing regulations -- and ensure compliance. The scope of enforcement authority may be broad and tough. It may include certification requirements, facility access rights, and compulsory information sharing. Noncompliance could result in civil or criminal penalties. In testimony before Congress, a former Deputy Assistant to the President and Deputy Homeland Security Advisor on the White House staff argued that "the criminal liability associated with non-compliance with the federal chemical security standards should certainly be no less stringent than that imposed by the Sarbanes-Oxley Act." Congress will decide whether to make DHS the SEC of chemical plant security under a Sarbanes-Oxley-like compliance regime.

Transportation Requirements: Congress has heard testimony that protecting chemical products as they move along the nation's transportation infrastructure is necessary to ensure meaningful security. Thus, legislation may include provisions that impact transportation providers. Some security experts view railroad tank cars, in particular, as a weak link in chemical security efforts.

Inherently Safer Technologies: Some members of Congress will press to include legislative provisions requiring the use of inherently safer technologies and products. Since the consequences of a terrorist attack are directly proportional to the hazards associated with the chemicals released, advocates believe that it is both necessary and reasonable to compel the use of inherently safer technologies.

The recent tragedy in London reminded the world community that terrorists remain a potent threat. It is highly probable that Congress, with the support of the Administration, will pass chemical facility legislation this year. Businesses likely to be impacted should monitor legislative developments and consider the possible range of legal strategies necessary for future compliance.

The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.

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